Page 22 - The Insurance Times July 2020

the prevailing policies is expected to reveals that the top 10 life insurers in policyholders while having a child or an
pressurize insurers’ technical reserves. South Africa have a strong hold of the addition to the family was the second
market, as they account for 83% of it. most common reason (12.7%).
Mitra continues: “Belgia insurers are
fighting to keep customers. General Ms Mitra continues: “The leading life In contrast, the largest proportion of
insurers have relaxed renewal terms provider in the country, Old Mutual, non-mortgage-related policyholders
and added additional services to their appears to be the most vulnerable as stated that no key event or factor had
customers. For instance, Fidea Assur- it generates approximately 99% of its triggered their purchase, as was the
ance extended the insurance to cover business from life insurance. The case for almost one quarter of policy-
vehicle theft for self-driven vehicles recessionary pressure on the economy holders.
valuing up to €100,000 until June 2020, could impact insurers’ incremental
Beatriz Benito, Senior Insurance Ana-
if the vehicle is unable to be equipped growth in premiums.”
lyst at GlobalData, comments: “The
with an anti-theft device due to Santam Beperk is the one leading lockdown has also interrupted the real
COVID-19. Measures like this, across a
South African company with a major- estate business. This has slowed down
range of products, will see GWP de-
ity presence in personal lines. The vast property sales, a trend that is expected
cline in the short-term, but insurers will
majority of its premiums are in motor to continue in the near future.
hope it means customers are less likely and property.
to cancel policies or switch providers. A fall in property transactions will fur-
Ms Mitra concludes: “This means it ther drive down the term assurance
may see premiums fall, as customers market, given that many customers
Life dominated South stay at home and drive less, but it buy life cover as a result of home mov-
Africa’s insurance market should also see a decline in claims, for ing. Added onto the difficulties of

to be put under immense the same reasons.” onboarding new customers, life insur-
ers can expect a sluggish market that
strain by COVID-19 COVID-19 complications is likely to contract over the short
South Africa’s top 10 insurers over- cause delays in life insur- term.”
whelmingly depend on the life insur- Other factors have also contributed to
ance sector for their premiums, which ance sales
the slowdown. It is customary for life
leaves them exposed to high claims as Life insurance sales are slowing as insurers to require medical records
a result of the COVID-19 pandemic, COVID-19 has led to disruption in the from individuals as part of the applica-
according to GlobalData, a leading processes and fewer house purchases, tion process for some life policies, par-
data and analytics company. a key trigger for life insurance pur- ticularly for those that are underwrit-
Nine of the top 10 insurers have at chases, says GlobalData, a leading data ten. Yet, lockdown measures to mini-
least 90% of their premiums just in life and analytics company. mize the spread of the virus and a fear
insurance while eight are exclusively In many instances, the purchase of a of overwhelming the NHS have made
life and personal accident and health. life policy is triggered by a key life obtaining GP reports challenging.
This compares to just two of the top event. By far, the most common type Ms Benito concludes: “Additionally,
10 being solely life in the US. of life cover is term assurance, which most life insurers have tightened up or
Deblina Mitra, Insurance Analyst at is often linked to a mortgage. made changes to their underwritten
GlobalData, comments: “South Africa According to GlobalData’s 2019 UK requirements, further impacting sales.
has over 200,000 confirmed cases as of Insurance Consumer Survey, (carried It has become relatively common to
6 July 2020. Therefore, a high exposure out in Q2 2019 with 4,000 respon- ask questions about coronavirus to
to life insurance implies a potential rise dents) 51.3% of term assurance policy- new applicants, including whether the
in claims, a fall in new business premi- holders held mortgage-related term individual has experienced a continu-
ums and a decline in returns on invest- assurance cover. Buying, moving or ous cough and/or fever or a tempera-
ment-linked products.” remortgaging a house was the most ture, if they had tested positive for

GlobalData’s report ‘Covid-19 Com- common reason for purchasing this coronavirus, or if they have been self-
pany Impact: Insurance – South Africa’ type of policy, as cited by 47.3% of isolating.” T

22 The Insurance Times, July 2020